Qualcomm Could Face Record Anti-Trust Fines In China

The National Development and Reform Commission could issue a penalty up to $1 billion – though the exact crime is obscure

The Chinese competition watchdog could hit Qualcomm with a $1 billion (£0.6b) fine if it finds that the company has been abusing its dominant position on the market.

Qualcomm CEO Paul Jacobs said that Qualcomm has not been told why it was under investigation, at the CES event in Las Vegas earlier this month. According to Reuters, the exact reason for the anti-trust investigation by the National Development and Reform Commission (NDRC) is still unknown, but it could be part of an attempt to drive down the costs of networking equipment ahead of the 4G roll-out next year.

It’s good to be the king

Qualcomm is the world’s largest manufacturer of chips for mobile devices. Its products are found in more than half the smartphones and tablets in China, itself the world’s largest mobile device market.

qualcomm-signBut the value of this market pales in comparison to the amount of money the country is about to spend on next generation cellular networks. According to Reuters, Chinese telecoms companies may invest as much as 100 billion Yuan (£9.9 billion) in 4G equipment.

NDRC started investigating Qualcomm last year, and by December reported there was “substantial evidence” of wrongdoing. The organisation is known for issuing harsh penalties to foreign companies caught conspiring with competitors or fixing their prices. It recently fined six infant formula manufacturers $110 million in a similar anti-trust case.

NDRC has the power to fine companies one to ten percent of their revenue, which, in Qualcomm’s case, stood at $12.3 billion in 2013. However, the regulator might be more interested in concessions that the telecoms giant could offer to avoid the fine, such as reduced licencing and royalty costs.

Last week, Qualcomm bought 2,400 patents that were developed by the legendary PDA-maker Palm before it was acquired by HP in 2010.

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